I would love to see "flat tax" to be put in place just for fun. You can probably guess why, without our "barely progressive" taxes in place oh it'd be so funny to see the people currently paying negative taxes wake up and scream "NOT FAIR".
They're not negative taxes - this is a subtle enough point that I was hung up on it for a while. The poor have a larger share of all of the income that's left after taxes are paid than they do of all of the income before taxes are paid. It's still less money (they're still paying positive taxes), but their part of the pie shrinks less than the whole pie shrinks.
But again, the "flat tax" is extremely regressive. I think that's a terrible thing for society - it's just an inefficient way to structure the tax system. (And you don't have to think about progressivity just in terms of the poor vs. the rich. It's also the middle class versus the rich, and the 99th percentile versus the 99.99th percentile. I'm not so much in this discussion for the class warfare side of it as what I see as the efficiency side of it.)
I understand you feel the current system is not fair, I am curious, how much % do you think the top 40% should pay? top 20%? top 1%?
Let me first disclaim that I would like a smaller government than we have and there are entire categories of things we spend money on that actively harm the welfare of the country (corn and milk subsidies, for example).
I wouldn't say our current system is
egregiously unfair as far as vertical equity goes - I'd save that label for the fair tax, the flat tax, and variants thereof. I would like just a bit more progressivity than we have currently in the overall system, but I think what we have now is in the ballpark. (The leftmost column of table 2 is a good place to see how progressive it is, but don't forget that the quintiles are by number of people and not number of dollars.)
What the fair tax and similar proposals suggest is absolutely terrible, though, pushing the incidence of the tax on those least able to bear it (just like sin taxes, which everyone fully understands do not change behavior). They're incredibly regressive, and it's intellectually dishonest to suggest that a single even tax credit makes them otherwise. (As a side note, if it were up to me we'd have a Value Added Tax, which like the fair tax is pretty regressive, so we'd need a much more progressive individual income tax system to maintain even the current level of progressivity if it were introduced.)
Where I think our current system
is egregiously unfair is horizontal equity - there's just none of it. Take two homeowners in the same economic circumstances but for differences in something like homeownership, dependents, or self-employment status, and they'll pay far different amounts of tax. That's horizontal inequity. I'm all for the oft-repeated Republican mantra of 'cut deductions, lower rates,' except that they only ever mean the second half of it when it comes time to write the bill.
To name just one example, the home mortgage interest deduction is worth more revenue than the entire corporate income tax, and the same people benefit from both of them - those in the top marginal bracket who own a lot of capital. What the hell is the point of that? We could cut a huge chunk out of the compliance costs and adverse incentives present in our tax system in one broad stroke, and we could pay for it with a single deduction! (I don't think there's a good economic reason that corporations need taxed, either - corporations are owned by people, so I think we should tax corporations at the dividend/capital gain level and nowhere else. But whatever your theoretical opinion, there's a powerful pragmatic argument to be made based on eliminating the incentives we currently give corporations to move abroad/manipulate transfer prices/buy companies for their tax assets/etc.)
Does that clarify my position a little more?
Grant 4 tax-dictator-for-a-day!